|Bid||12.01 x 1400|
|Ask||27.90 x 1000|
|Day's Range||27.55 - 27.71|
|52 Week Range||17.76 - 29.22|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
(Bloomberg Opinion) -- Corporate chicanery appears in multiple forms and with unfailing regularity: think Enron Corp. or Wirecard AG. What bedevils capitalism in India is the propensity of some investors to cheat all other stakeholders.In good times, “promoters” — as controlling shareholders are known in local law — puff up project costs and award contracts to related parties, draining profits away from the company. The extraordinary effort that entrepreneurs put in to beat the country’s legendary red tape provides, at least in some minds, a justification for helping themselves to an outsize share of the spoils. A highly opaque system of election financing gives politicians a stake in perpetuating the status quo. In bad times, promoters leave creditors with hardly any value to extract from failed businesses. The biggest victim is a state-dominated banking system that recoups very little from insolvent companies. To give government-backed lenders visibility on whether their funds are being siphoned off, the central bank recently took a drastic step. Any company with 500 million rupees ($6.7 million) or more in debt will have to open a dedicated account at a bank exposed to at least 10% of its borrowings to pay creditors. Only the lender operating this escrow account can handle the firm’s day-to-day banking business. Since public-sector banks do the bulk of corporate lending, they stand to gain current accounts. Existing banking relationships will need to be consolidated within three months. This is bound to upset the likes of Citigroup Inc., HSBC Holdings Plc and Standard Chartered Plc. These global-local, or “glocal,” banks have been beefing up their cash management platforms — and integrating them with their customers’ computer systems. The more they help businesses save money across cross-border supply chains and earn smart returns on idle balances, the bigger the current-account pile that gravitates toward them.Citigroup alone has $900 billion-plus of such deposits worldwide. This is free funding, which takes banks years of investments in technology and customer relationships to acquire. To be asked to cede this advantage in an important market is unfair. Take Citi again. With the exception of State Bank of India, the biggest Indian lender, no government-controlled institution enjoys a deeper penetration when it comes to acting as the lead cash management bank for India’s largest companies.The U.S. bank isn’t alone. The U.K.’s StanChart is also competitive in signing up top companies. HSBC and Singapore’s DBS Group Holdings Ltd. are the other two foreign banks with significant cash management businesses.“The dislocation over the next few months can be unsettling for both the glocal banks and their cash-management customers,” says Gaurav Arora, Greenwich Associates’ head of Asia-Pacific. If the Reserve Bank of India’s move smacks of being an act of desperation, that’s because it probably is. India’s labor-surplus economy can’t afford to keep hemorrhaging precious financial capital to promoters’ private-bank accounts in Singapore or Switzerland. And yet such is the political power of large debtors that every legal tool given to creditors has tended to become blunt over time. The 2016 bankruptcy act, the latest and most promising in the series, saw recovery rates of just 12% in the December quarter. Worse still, after the coronavirus outbreak, insolvency courts have been shut for a year to new cases. The pandemic has also brought back loan restructuring, where banks can extend repayment tenures and pretend that accounts are standard and don’t need additional provisions. This, as Fitch Ratings notes, is a reprisal of India’s strategy between 2010 and 2016. Back then, extend-and-pretend exacerbated what would eventually become a $200 billion-plus stressed asset problem.The big idea behind the current-account regulation seems to be this: If taxpayer-funded banks can’t hope to recover much from dead companies, they should at least be able to monitor how living ones use their money. However, just because bankers can see more transactions doesn’t mean they will. Punjab National Bank lost nearly $2 billion in a scandal involving an uncle-nephew jeweler duo by running up international liabilities over the Swift messaging network — and not reconciling them with its core banking software. The scam went on for seven years. Since then, PNB claims to have been swindled three more times.India’s banks need long-pending governance reforms. To thwart bad behavior, the RBI needs more muscular supervision. Hijacking customers of Citi or StanChart and redistributing them among those who don’t necessarily have the best expertise is socialist overkill. It will also prove useless. Errant company bosses will be one step ahead, as they’ve always been. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Billionaire George Soros showed interest in big banks and cloud-computing companies in the second quarter, according to a filing with the Securities and Exchange Commission. In the quarter ended June 30, Soros Fund Management added a new 1.2 million-share position in Bank of America Corp. , a new 515,000-share position in Citigroup Inc. , a new 258,000-share position in J.P. Morgan Chase , a new 582,000-share position in Morgan Stanley , a new 217,000-position in PNC Financial Services Group Inc. , and a new 762,000-share position in Wells Fargo & Co. . Soros also added a new 69,000-share position in CrowdStrike Holdings Inc. , and new positions of about half that size in DataDog Inc. , Palo Alto Networks Inc. , Zendesk Inc. , Splunk Inc. , and Zscaler Inc. . Soros eliminated his positions in Walt Disney Co. and Boeing Co. . Notably, he also sold off almost all of his 2 million stake in Inovio Pharmaceuticals Inc. , and trimmed his 3-million stake in Peloton Interactive Inc. to 509,000 shares.
(Bloomberg Opinion) -- King dollar still reigns supreme. And that means there are two ways for banks to go: the U.S. way, or the highway.Hong Kong and Chinese officials scoffed when the Trump administration imposed sanctions last weekend on 11 individuals deemed to have played a role in undermining the city’s autonomy. Luo Huining, director of the central government’s Liaison Office, noted that he had no assets abroad and offered to “send $100 to Mr. Trump for him to freeze.” Chief Executive Carrie Lam said she wouldn’t be intimidated and derided the U.S. notice for getting her address wrong. The Hong Kong Monetary Authority gave banks in the city a pass, saying they had no obligation to follow U.S. sanctions under local law.The actions of lenders tell a different story. China’s largest state-run banks in Hong Kong are taking tentative steps to comply with the sanctions, Bloomberg News reported Wednesday, citing people familiar with the matter. Major lenders with operations in the U.S. including Bank of China Ltd., China Construction Bank Corp. and China Merchants Bank Co. have turned cautious on opening new accounts for the sanctioned officials, and at least one has suspended such activity.It’s another demonstration of the realpolitik of the dollar system and the financial power that comes with being the issuer of the world’s dominant reserve currency. China’s state-controlled lenders would be the last to willingly follow a directive condemned as “clowning actions” and “shameless and despicable” by the Chinese and Hong Kong governments. HSBC Holdings Plc, Standard Chartered Plc, Citigroup Inc. and other lenders with operations in Hong Kong and ambitions in China will look on with relief. Squeezed between the conflicting demands of Hong Kong’s national security law and U.S. sanctions, they have been given political cover.For banks with international operations, the threat of having their access to dollar funding and overseas networks curtailed cannot be countenanced. Just look at how the U.S. has been able to impose its will via sanctions on Iran, despite resistance from Europe.Dealing in currencies other than the dollar provides little cover, as China’s Bank of Kunlun Co. found out. The country’s main lender for processing Iran-China payments, Kunlun was sanctioned by the U.S. Treasury Department in 2012. The bank responded by starting to handle payments from Iran in yuan and euro instead, yet halted even these in 2018 under sanctions pressure, according to Reuters.It’s little wonder that China wants to challenge the dollar’s global dominance. While officials have spoken frequently of their ambition to give the yuan a bigger role, there’s little sign of progress. The dollar’s share of international payments rose in the past year, while the proportion of payments in yuan remains negligible, according to data from the Brussels-based Society for Worldwide Interbank Financial Telecommunication, or Swift.As my colleague Andy Mukherjee and I have argued, banks are cogs in a giant financial machine that Washington keeps aligned with its foreign policy goals. Take the case of Huawei Technologies Co.’s finance chief Meng Wanzhou. The daughter of Huawei’s founder is currently battling extradition from Canada to the U.S. on charges that she misled HSBC into clearing transactions that potentially violated Iran sanctions. Lawyers for Meng, who has denied the charges, have argued HSBC could have avoided making the payments through the U.S. HSBC routed the money through New York’s Clearing House Interbank Payments System, or Chips, which handles 95% of all dollar transactions, or $1.6 trillion a day.While it’s technically feasible to clear payments in the much smaller offshore dollar market in Hong Kong, when money crosses borders it is accompanied by instructions transmitted by Swift. Since the September 2001 terrorist attacks, the U.S. has watched over financial flows through the organization. In practice, it would have been almost impossible for money destined for Iran to avoid scrutiny.The message ringing from China’s banks is louder and clearer than the contrary protestations of the country’s officials. Like it or not, it’s still a dollar world. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.